N.D.C.C. § 57-38-01.4 — Recognition of subchapter S election

1. For the purposes of this chapter, any person as defined in section 57 -38-01 and
required to file a North Dakota income tax return who makes an election under
subchapter S of the Internal Revenue Code of 1954, as amended, for federal income
tax purposes shall have such status recognized and such person's taxable income
must be computed as provided in subchapter S of the Internal Revenue Code of 1954,
as amended, with the adjustments allowed by this chapter or other provisions of law.
Income of a subchapter S corporation subject to tax for federal income tax purposes is
also subject to state income tax at the corporate income tax rates imposed by section
57-38-30.
2. The distributed and undistributed taxable income of an electing small business
corporation for federal and state income tax purposes derived from or connected with
sources in this state does constitute income derived from sources within this state for a
nonresident person who is a shareholder of such a corporation, and a net operating
loss of such corporation derived from or connected with sources in this state does
constitute a loss or deduction connected with sources in this state for such a
nonresident individual.